Auto dealers are receiving the brunt of current economic problems, including swelling gas prices, a slowing economy and a credit crisis. Yet, new vehicle dealerships are still a boon to retail sales in the United States—accounting for 20 percent of all retail sales in the country at more then 675 billion dollars in sales per year, according to the National Auto Dealer Association’s 2007 study.
Collectively, the more than 20,000 U.S. new vehicle dealerships recorded in the study spend annually a total of 7.8 billion dollars on advertising, with each dealer spending an average of $37,029 or 10 percent of its advertising budget on direct mail alone. There is a need for direct mail services in the auto industry, and because car sales, and even leads, can still be hard to come by these days, dealers require more marketing services to retain current customers and find new prospects.
Experts who specialize in providing advertising and marketing services to auto dealers shared insights on how their customers implement direct mail and how vendors can get involved.
Driving a Relationship With Auto Dealers
Auto dealerships purchase their own advertising services. They use direct mail to retain current customers, generate leads and build retail traffic in showrooms and service departments.
To get started in building a vendor relationship with an auto dealership, it is best to approach either the principal or the general manager, advised Tom Letizia, president and owner of Las Vegas-based Letizia Ad Team, a full service ad agency specializing in auto dealerships.
When reaching out to dealers, be sure you are familiar with their specialties, whether it’s new vehicles, used vehicles or sub-prime sales. “If you’re a dealer looking to drive service traffic, you want to make sure the mailer is not one of those midnight madness balloons all-over-the-page mailers,” said Glenn Benedict, head of sales with On-Target Direct, a Newport Beach, Calif., company offering direct mail to auto dealers.
Auto dealers’ foremost concern is a vendor’s credibility. “I think dealerships are very wary of direct mail vendors because there [are] a lot of mail houses out there, and some ... don’t stand by their word,” observed Peter Anastasiadis, vice president of Concept X Advertising, a full service ad agency for auto dealers based in Melville, N.Y. Samples, referrals and testimonials can help establish direct mail credibility. Anastasiadis also believed dealers are happy to work with local businesses and companies which are already trusted by industry insiders, or who have partnered with a dealer’s own advertising agency.
Dealership’s Direct Mail Needs
There are entry points for printers and direct mail suppliers in this niche market. Although a one-stop-shop, with bundled marketing services, is appealing, auto dealers generally work with several vendors to fulfill a slew of marketing needs. “I think it’s becoming more of a specialized industry now where dealers may have one person they use for direct mail, and they may have somebody else [who] does their general advertising,” Letizia explained.
Some dealers mail to their prospects at least quarterly, while others mail monthly or even more frequently. “I’ve got some dealers who do 30,000 pieces of mail per month, and we have other dealers who do 5,000 pieces a quarter,” Benedict shared. According to the size of the company, the budget for direct mail fluctuates from a couple thousand dollars to well into the six-figure range. The mailings themselves vary in format from postcards to deluxe self mailers, and from business letters to coupon mailers.
Anastasiadis recommended official-looking letter mailers, which appear to be coming from the manufacturer. “If you own a Nissan, and you get a letter from Nissan, you’re pretty much going to open it up, and half the battle of direct mail is getting prospects to open the letter,” he said. Combined with a coupon for maintenance, or a pre-qualifying offer, the letter mailer is an auto dealer’s direct mail staple. Benedict observed dealers sending more promotional looking 81⁄2x14" trifold self-mailers with full color and attached service coupons.
Most dealers will do high saturation mailings in less expensive formats, such as postcards or self mailers, to cast a wide net for new leads. “The saturation pieces are very good because they reach everybody. It takes the guesswork out. You’re just hitting all the homes in a specific geographic area,” Letizia offered.
Service Department Needs
Approximately 41 percent of new vehicle dealerships have service shops. If dealers achieve a high level of service absorption—where the service shop revenue covers dealership operating costs—then car sales are pure profit.
The service center, therefore, mails coupons and maintenance reminders both to local drivers and past purchasers. “If you mail to customers every 21 to 30 days, then when that next oil change comes around or their engine starts making that funny sound, they have the service coupon they need to think of you first,” said Benedict.
At some dealerships, the service center operates on its own marketing budget and you will need to contact the head of the service department to gain that business. Access to certain lists will increase your value in the eyes of a service department. “If they are a Ford dealership, for instance, we can get a list of the people who drive Fords in their area,” Benedict added.
Lists for Automotive Direct Mail
Providing auto industry lists is a plus. Examples include lists from Fico Score, Beacon Score, Car Registration, Bankruptcy and New Homeowner. “Pretty much all of this data is in the public domain. There’s a lot of information you can get your hands on,” Letizia commented. Experian, TransUnion, Equifax and public records are also some of the list sources which auto marketers mentioned.
The right lists combined with digital presses can give the mailer variable data capability. “The more variable data you can put on a mail piece, the more relevant you make it for the customer and the higher the chance that this is going to strike a chord with them and the customer is going to respond,” Benedict said.
He went on to describe a variable data mailer that would identify the prospect’s current make, model and finance history, and then supply information on available vehicles at the dealership within his or her range. “We can narrow down more and more the opportunity for a new vehicle for the prospect,” continued Benedict.
Multichannel Mailers Help Track Results
Auto dealers use personalized URLs (PURLS) to capture and further qualify leads. Including a PURL on a mail piece, Benedict explained, can drive the prospect online to a personalized Web page populated with his or her detailed auto history. The prospect is then prompted to answer a few simple questions about his or her interests in new vehicles, and this information is sent on to the dealership. When the salesperson at the dealership is notified of the prospect’s action online, he or she can make a sales call, equipped with the prospect’s full list of needs.
Tracking online or via an 800 number helps dealers learn more about their lists. “It’s a little bit harder to track radio or TV ... so direct mail is one of the most important areas to track because you need to find out where leads are coming from, who they are and why they’re coming,” Letizia asserted. “When the customers call an 800 number ... you’ll know exactly which campaign it came from, how many calls you received from each campaign and track it down to the zip code level, so you can see which zip codes are performing better for you,” said Benedict.
Opportunities to Sell Related Services
Once you are working with an auto dealer, you can offer a number of related services. “It’s tough to get a one-stop-shop—but in a perfect world, if they could get that then it could make the dealer’s job a lot easier,” Benedict said. His company is able to offer a valuable-customer follow-up service to dealers. “We send out a nice attractive gift with the dealer’s name and logo on it. Then we follow up with a survey to find out how happy the customer is with that particular dealership. We’ll follow up with the prospect for a number of years both to invite them back into the service department and back in to buy [his or her] next car at the dealership,” Benedict said.
Anastasiadis’ company offers a wide range of auto dealer services, from credit card processing and financial services to gift cards and rewards programs. “We do a lot of things that most companies don’t, because our feeling is, if you get one dealership to believe in you, that dealer’s going to tell 10 more,” he said.
Importance of Mail in the Marketing Mix
Direct mail remains a staple for auto dealers whose focus is localized retail sales. “More often now I am including direct mail as part of my media mix because it does work and it can be extremely effective, amounting to a number of car sales every month at a dealership,” Letizia stated.
In today’s slow sales environment, customer loyalty is becoming an industry focus. “We’re going to see a trend where dealerships are going to be mailing a lot more to their current customers. Before, if they were selling at a rate of 200 customers per month [but are] now ... down to 100 customers per month, every single customer is worth gold,” Benedict said.
Along with direct mail, a strong auto dealer’s marketing mix may include Web, print, television, billboards and radio. The more channels a dealership uses, the more results they’re going to see,” Benedict added.
“Mail is one aspect of an advertising campaign, but it is always more effective when combined with a media campaign on radio, television or newspaper,” Letizia concluded.
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